The global stock market witnessed significant upheaval at the start of last week as U.S. President Donald Trump threatened a new wave of protectionist measures against European allies. The tension centered on the so-called “Greenland row,” with the U.S. administration threatening across-the-board duties of 10% to 25% on eight European nations.

However, the narrative took a dramatic turn in the mid of the week at the World Economic Forum in Davos. Following a pivotal meeting with NATO Secretary-General Mark Rutte, President Trump retreated from his tariff remarks, announcing a "framework of a future deal" on Arctic security that effectively eased the immediate threat of a transatlantic trade war.

While European trade tensions cooled somewhat, fresh concerns resurfaced on the trade front with Canada. President Trump lately threatened to impose 100% tariffs on Canada over that nation's trade deal with China, as mentioned in Yahoo Finance.

Despite these geopolitical developments, Wall Street strategists are urging investors not to overreact to the Greenland-related tensions. Instead, they say corporate earnings growth is likely to be the primary driver pushing stocks higher this year, quoted in another Yahoo Finance article.

Strong Q4 Earnings Expectations

The Q4 earnings season is off to a solid start, with growth accelerating and most management teams offering stable-to-positive outlooks for their businesses. Companies are comfortably beating consensus estimates, with Q4 EPS and revenue beat rates tracking above historical averages.

For Q4 2025 as a whole, S&P 500 earnings are currently expected to rise 8.7% year over year on 7.9% higher revenues. This would mark the 10th consecutive quarter of positive earnings growth for the index, per Zacks Earnings Trends issued on Jan. 21, 2026.    

Total earnings for the 51 S&P 500 companies that have reported Q4 results so far are up 17.2% year over year on 7.5% higher revenues. Notably, 88.2% have beaten EPS estimates, while 72.5% have topped revenue expectations. 

Looking at the full-year picture, total S&P 500 earnings are expected to grow 12.2% in 2026. Excluding the Tech sector’s contribution, earnings growth is projected to moderate to around 8%.

Policy Tailwinds Add to 2026 Outlook

BNY Wealth strategists believe tax incentives and capital expenditure benefits from President Trump’s “Big Beautiful Bill” could further support earnings growth in 2026. The bill is expected to lower the corporate tax rate by roughly 3%, according to Yahoo Finance.

Beyond Big Tech: Broadening of Market Breadth

Importantly, strategists expect earnings momentum to broaden beyond technology stocks and the so-called “Magnificent Seven.” Q4 earnings are projected to be higher year over year for 8 of the 16 Zacks sectors, with Aerospace (+63.6%), Technology (+15.3%), and Finance (+18.7%) posting double-digit growth, per the above-mentioned Zacks Earnings Trends.

All 16 Zacks sectors are expected to deliver positive earnings growth in 2026—the first time since 2018. Nine sectors are projected to achieve double-digit growth, including Aerospace (+38.3%), Autos (+22.8%), Basic Materials (+23.1%), Technology (+20.5%), Transportation (+13.3%), and Industrials (+11.6%).

S&P 500 ETFs in Focus

Against this backdrop, investors may track the S&P 500-based exchange-traded funds (ETFs) like Vanguard S&P 500 ETF (VOO Quick QuoteVOO - Free Report) , iShares Core S&P 500 ETF (IVV Quick QuoteIVV - Free Report) , SPDR S&P 500 ETF Trust (SPY Quick QuoteSPY - Free Report) and Invesco S&P 500 Momentum ETF (SPMO Quick QuoteSPMO - Free Report) .

Apart from SPY, VOO and IVV, investors can play the growth part of the index with SPDR Portfolio S&P 500 Growth ETF (SPYG Quick QuoteSPYG - Free Report) and the value part of the index with SPDR Portfolio S&P 500 Value ETF (SPYV Quick QuoteSPYV - Free Report) .